(THE BUSINESS TIMES) – The manager of SPH Reit has said it will not change its approach to acquisition, even with the unprecedented disruption caused by the pandemic.
In its response to questions from the Securities Investors Association (Singapore), or Sias, the manager said that while the turmoil in the retail real estate market caused by Covid-19 may present acquisition opportunities, the Reit will continue to exercise care and due consideration.
This is particularly “due to the risks brought about by uncertainty in the retail market”, it added.
SPH Reit’s portfolio in the medium term will remain primarily Singapore-based assets. It has not set a targeted capital allocation by geography, in order to maintain flexibility in the exploration of acquisition opportunities, the manager said.
Asked by Sias about the experience of the manager and board of directors in investing in retail malls in Australia, the manager said that the core strength and competency of the team is in the retail sector.
It added that the first acquisition in Australia, Figtree Grove Shopping Centre in December 2018, was acquired with a minority joint-venture partner, who also acts as the asset manager, to ensure an alignment of interests. A local property manager was also appointed.
The second acquisition was a 50 per cent stake in Westfield Marion Shopping Centre a year later. The other 50 per cent owner is Scentre, which has managed the asset for more than 25 years, the manager said.
Both acquisitions are distribution per unit (DPU) yield-accretive, generating about 0.45 cents DPU in FY2020.
Sias further queried SPH Reit’s manager on the level of influence and control of the operations in the Australia assets, given that the manager relies on appointed investment and property manager for the day-to-day running.
The manager said that as co-owner, SPH Reit participates actively in the day-to-day management. “A detailed operating framework is in place for the review and approval of budgets, leasing plans, as well as proposed asset enhancements and capital expenditure,” it added.
The manager denied acting as a mere “financial” investor with little to no ability to add value.
It said the board remains committed to releasing the deferred $14.5 million in distributable income, amounting to DPU of 0.52 cent, to unitholders.
Units in the Reit closed at 83 cents on Wednesday, up 0.5 cent or 0.6 per cent.